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SAM is an investment advisory firm organized as a corporation under the laws of the Commonwealth of Puerto Rico. SAM is registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended. SAM also is regulated by the Commissioner, and the conduct of its investment business is regulated by the Commissioner. The principal offices of SAM are located at Santander Tower Building, Suite 1800, Tabonuco Street B-7, Guaynabo, Puerto Rico 00968-3028, and its main telephone number is (787) 759-5340

SAM provides the Fund with investment advisory and management services, subject to the control of the Board of Directors and the officers of the Fund. As the investment adviser, SAM is responsible for choosing the Fund’s investments and handling its business affairs. SAM offers a wide range of money management and investment services to individuals and institutional clients in Puerto Rico. SAM also serves as investment adviser to the other First Puerto Rico Funds, all of which operate in Puerto Rico. As of September 30, 2012, SAM had assets under management of $4.0 billion. The principal address of SAM is Santander Tower Building, Suite 1800, Tabonuco Street B-7, Guaynabo, Puerto Rico 00968-3028. SAM is a wholly owned subsidiary of Santander Securities; Santander Securities is a wholly owned subsidiary of Santander Bancorp, which is a wholly owned subsidiary of Administración de Bancos Latinoamericanos Santander, S.L. (“ABLASA”), which in turn is a wholly owned subsidiary of Banco Santander S.A. SAM is an affiliate of Banco Santander.

The Fund pays SAM a monthly fee at an annual rate of 0.75% of the average weekly net assets of the Fund plus the proceeds of any outstanding commercial paper or other debt securities, the proceeds from borrowings from banks or other financial institutions, reverse repurchase agreements and dollar rolls entered into for leverage (but not including borrowings for temporary, emergency or defensive purposes). “Average weekly net assets” means the average weekly value of the total assets of the Fund, including the liquidation preference of any outstanding preferred stock, and the aggregate outstanding amount of any debt securities of the Fund, minus the sum of accrued liabilities of the Fund (excluding outstanding leverage), any accrued and unpaid interest on outstanding commercial paper, debt securities and other borrowings, and accumulated dividends on outstanding shares of preferred stock. For purposes of this calculation, average weekly net assets are determined at the end of each month on the basis of the average net assets of the Fund for each week during the month. The assets for each weekly period are determined by averaging the net assets on the Wednesday, if such day is a business day, of a week with the net assets on the Wednesday, if such day is a business day, of the prior week. The fee is computed weekly and paid monthly. SAM has agreed to waive its investment advisory fees and, if necessary, reimburse the Fund to the extent that total annual operating expenses (including the investment advisory fees but excluding interest, taxes, brokerage commissions and extraordinary expenses) exceed 1.00% of average weekly net assets (including the assets purchased with the proceeds of leverage) until at least June 30, 2014. In addition, SAM may waive or reimburse investment advisory fees voluntarily from time to time. There is no assurance, however, that any such waiver or reimbursement, if commenced, will be continued. Any reduction in SAM’s management fees is

subject to reimbursement by the Fund within the following two fiscal years if overall expenses fall below these percentage limitations. The Investment Adviser reserves the right to discontinue any voluntary waiver of its fees or reimbursements to the Fund in the future.

The Investment Adviser provides the portfolio management for the Fund. Such portfolio management will consider analyses from various sources (including brokerage firms with which the Fund does business), make the necessary investment decisions, and place orders for transactions accordingly. The Investment Adviser also will be responsible for the performance of certain administrative and management services for the Fund, including paying all compensation of and furnishing office space for officers and employees of the Fund connected with investment and economic research, trading and investment management of the Fund, as well as the compensation of all Directors of the Fund who are affiliated persons of the Investment Adviser or any of its affiliates. The Fund pays all other expenses incurred in the operation of the Fund, including, among other things, expenses for legal and auditing services, taxes, costs of printing proxies, listing fees, if any, stock certificates and shareholders reports, charges of the administrator, the custodian and the transfer agent, charges of any paying agent, auction agent and broker-dealers in connection with the Fund’s commercial paper or other debt securities or its shares of preferred stock, expenses of registering shares of common stock, commercial paper or other debt securities or shares of preferred stock under Puerto Rico securities laws, fees and expenses with respect to any issuance of debt securities or shares of preferred stock or any borrowing, fees of the Office of the Commissioner of Financial Institutions of Puerto Rico, fees and expenses of the Independent Directors, accounting and pricing costs, insurance, interest, brokerage costs, litigation and other extraordinary or non-recurring expenses, mailing and other expenses properly payable by the Fund.

Unless earlier terminated as described below, the investment advisory agreement will continue in effect for a period of two years from the date of execution and will remain in effect from year to year thereafter, if approved annually (a) by the Board of Directors of the Fund or by a majority of the outstanding Shares of the Fund and (b) by a majority of the Independent Directors. The investment advisory agreement is not assignable and may be terminated without penalty (i) on 60 days’ written notice at the option of either party thereto or by the vote of a majority of the outstanding Shares of common stock of the Fund or (ii) at any time by a unanimous vote of the Independent Directors.

The Investment Adviser, its affiliates performing services for the Fund under the investment advisory agreement between the Investment Adviser and the Fund, and the directors, officers and employees of the Investment Adviser and such affiliates, shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Fund, except for willful misfeasance, bad faith, gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties under the investment advisory agreement.

Securities held by the Fund also may be held by, or be appropriate investments for, other funds or investment advisory clients for which the Investment Adviser or any of its affiliates acts as an adviser. Because of different objectives or other factors, a particular security may be bought for one or more clients when one or more clients are selling the same security. If purchases or sales of securities by the Investment Adviser for the Fund or other funds for which it acts as investment adviser or for advisory clients arise for consideration at or about the same time, transactions in such securities will be made, insofar as feasible, for the respective funds and clients in a manner deemed equitable to all. To the extent that transactions on behalf of more than one client of the Investment Adviser or any of its affiliates during the same period may increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price.

Administrator

Under the terms of an administration agreement with the Fund, SAM (in such capacity, the “Administrator”) performs, or arranges for the performance of, certain administrative services (i.e., services other than investment advice or related portfolio activities) necessary for the operation of the Fund. These administrative services include, among other things, providing facilities and personnel to the Fund in the performance of certain services, including the weekly determination of the net asset value per share of common stock of the Fund, based upon, among other things, the pricing of the Fund’s portfolio securities, maintaining and preserving the books and records of the Fund, assisting in the preparation, printing and dissemination of reports and other communications to shareholders, coordinating the audit of the Fund, and providing regulatory compliance services.

such as custody services and fund accounting services. The administration fee will be at the following rates for the following ranges of average weekly net assets:

Annual Rate Average Weekly Net Assets of the Fund

0.13% $0.00 - $249,999,999.99

0.10% $250,000,000.00 - $499,999,999.99

0.07% $500,000,000.00 and over

Transfer Agent

Pursuant to a transfer agency agreement with the Fund, Banco Santander, as transfer agent, is responsible for the issuance and transfer of the Shares, the opening and maintenance of shareholder accounts and the payment of the Fund’s expenses. For the services rendered by the transfer agent to the Fund, the Fund pays the transfer agent a monthly fee at an annual rate of 0.03% of the average weekly net assets of the Fund, plus out-of-pocket costs for services rendered to the Fund.

Banco Santander is a wholly owned subsidiary of Santander Bancorp, which is a wholly owned subsidiary of ABLASA, which in turn is a wholly owned subsidiary of Banco Santander S.A. Banco Santander is an affiliate of SAM and Santander Securities.

Pursuant to its transfer agency agreement, Banco Santander may appoint a sub-transfer agent for the performance of certain transfer agency obligations.

Custodian

Citibank, N.A. (“Citibank”), as custodian for the Fund’s assets, is responsible for the custody of the securities and cash of the Fund. The Fund pays fees to the custodian and reimburses its expenses. Citibank is a national banking association with principal offices located at 111 Wall Street, New York, New York 10005.

Pursuant to its custodial services agreement, Citibank may appoint a sub-custodian for the performance of certain custodial obligations.

Banking Relationship

The Investment Adviser and its affiliates may have deposits, loans, and other relationships with the issuers of securities purchased on behalf of the Fund, including outstanding loans to such issuers which may be repaid in whole or in part with the proceeds of securities so purchased. The Investment Adviser has informed the Fund that, in making its investment decisions, it does not obtain or use material inside information in the possession of the Investment Adviser or in the possession of any affiliate of the Investment Adviser.